RBC says European gyms fit to work any scenario out

RBC Bearings

01/11/2021 07:55

** RBC says there is no need to worry about low-cost gym
sector's medium-term perspectives as people become gradually
unfazed by development of pandemic thanks to vaccines, among
others 
    ** The segment "remains a structural sweet spot, set to
benefit in the medium term from increasing health consciousness
as we emerge from the pandemic," the brokerage says
    ** RBC notes leading scale players in their respective
markets GYM Group  GYM.L  ("outperform") and Basic Fit  BFIT.AS 
("sector perform) are well placed to benefit as consumer
behaviour is likely to remain robust
    ** Even in case of worst case scenario of further gyms
closures, both firms would have sufficient liquidity to not only
survive, but also keep executing on expansion plans
    ** Only risk could be potential need to renegotiate leverage
covenants with banks in 2022, it adds
    ** GYM Group is RBC's top pick as the company is set to
boost its UK market share by 5% to 30%, driven by factors such
as sub-scale players' limited ability to roll out new sites,
to-date cost inflation under control
    ** RBC forecasts about 20% lease compound annual growth rate
in adjusted earnings per share for both companies over 2023-25
   

    


 (Reporting by Federico Maccioni)
 ((Federico.maccioni@thomsonreuters.com))